Let the Inverse Demand Curve for a Monopolist's Product Be

question 36

Multiple Choice

Let the inverse demand curve for a monopolist's product be P = 100 - 2Q and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P₁ = $70 and the second block provides an additional 15 units at a price of P₂ = $40. How much does the monopolist's profit rise with this scheme?

• A) $225
• B) $337.50
• C) $450.50
• D) $512

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